CARES Act Payroll Tax Deferral Provision Due To Expire December 31
Dec 14, 2020
Under the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law earlier this year, businesses were provided the option to delay paying the employer portion of the Social Security payroll taxes on wages paid for the period from March 27, 2020, through Dec. 31, 2020. As we close on 2020, now is the time to set reminders for the following as this provision is set to expire:
Updating your payroll deductions for 2021 – If you elected to defer your payroll taxes, you will want to ensure your employer portion of withholdings has been reset for the new year. If you work with a payroll provider, connect with them to make sure you have stopped deferring. For those organizations who manage payroll internally, again, double check your deferral has ceased. In addition, you will want to make sure your fourth-quarter Form 941 (due January 31, 2021) reflects what you deferred.
Due dates for repayment – Any 2020 deferred payroll tax amounts are due to the federal government in two installments.
- One-half at the end of December 31, 2021.
- The remaining half at the end of December 21, 2022.
While employers are not required to submit their first payment of deferred taxes until December 2021, the CARES Act does not prohibit employers from early payment.
Income tax deduction – Employers who have opted to defer may be surprised to learn that these accrued payroll taxes, while in the books for 2020, may not be deductible from their taxable income until later. Accrual basis taxpayers seeking to claim deductions on their 2020 returns for deferred payroll tax liabilities incurred prior to Dec. 31, 2020, may be able to do so if they pay their deferred payroll taxes by Sept. 15, 2021. This may be particularly appealing to taxpayers generating losses in 2020 that will be carried back to higher tax years.
Planning ahead is key! To learn more about how this payroll tax deferral may impact your business, please contact your William Vaughan Company advisor today.
Categories: COVID-19, Tax Compliance
New Ohio Relief Programs Approved To Help Families, Small Businesses & Restaurants/Bars
Oct 26, 2020
On Friday, October 23, Ohio Governor Mike DeWine approved several new programs aimed to provide much-needed relief to small businesses, restaurants/bars, and low-income families negatively impacted by COVID-19. These programs include:
Small Business Relief Grant – This program will designate up to $125 million of funding received by the State of Ohio from the federal CARES Act to provide $10,000 grants to small businesses with no more than 25 employees to help them through the current crisis. The program will be administered by the Ohio Development Services Agency. If you are a small business with no more than 25 employees, you can apply for one of the first-come, first-serve grants starting on November 2, 2020. Businesses can use the grants to pay for various expenses including mortgages, rent, utilities, salaries, health care premiums, business supplies, and other related operational costs. Click here to review the terms & conditions of the program. Ineligible businesses include, but are not limited to nonprofits, private schools, clubs, etc.
The Bar and Restaurant Assistance Fund – This program is designed to assist Ohio’s on-premise liquor permit holders. Governor Mike DeWine has designated $37.5 million of funding received by the State of Ohio from the federal CARES Act to provide $2,500 assistance payments to on-premise liquor permit holders to help them through the financial difficulties experienced during the COVID-19 pandemic. These permit holders have not been able to fully use their liquor permit and it’s had an impact on their business. The program, which will begin accepting applications on November 2, 2020, will be administered by the Ohio Development Services Agency. Click here for more information on how to apply.
Home Relief Grant – Also accepting applications starting November 2, 2020, is the Home Relief Grant Program which will help eligible Ohioans who are behind on rent, mortgage, and water and/or sewer utility bills catch up on past payments back to April 1, 2020, and provide additional assistance through December 30, 2020. Ohioans can apply for assistance through their local Community Action Agency. Click here for more information on how to apply.
As always, we are here to provide assistance. If you have immediate questions or concerns, please reach out to your William Vaughan Company advisor today or call us at 419.891.1040
Categories: COVID-19, Other Resources
Election 2020 Tax Policy Comparison
Oct 15, 2020
As the 2020 presidential election inches closer, how do President Trump’s and Vice President Biden’s tax proposals compare?
Check out our resources below. In addition, William Vaughan Company’s Tax Practice Leader, Sandi Towns has outlined some estate tax planning considerations in our latest WVC Short, here.
Flyer_Tax Comparision_2020 Presidential Election Tax Comparison
Categories: Tax Compliance, Tax Planning
How to Protect Your Business from COVID-19 Phishing Scams
Sep 14, 2020
As the coronavirus (COVID-19) pandemic continues to impact businesses globally, cybercriminals are taking advantage of this crisis, through phishing tactics, for their financial gain. Phishing is the fraudulent attempt of a cybercriminal to act as a trusted source to gain sensitive information, typically resulting in financial gain for the criminal. Since January 1, 2020, the Federal Trade Commission has received more than 90,000 reports related to COVID-19 fraud with a total loss of $114 million since the beginning of the year.
Business owners already have the day-to-day operations of managing employment needs, fulfilling client orders, and running back-office tasks to manage; the list goes on and on. Having to worry about a phishing attack shouldn’t be one of those added tasks. However, a surge in COVID-related fake emails with dangerous attachments, links, and requests for personal information is our reality.
As teams work remotely, businesses have increased their use of web-based meetings. An example of a COVID-19 phishing scam involves the use of Zoom websites. Scammers are sending fictitious Zoom web address links, that when launched, download viruses that compromise the company’s data. These scams result in expensive fixes to restore company networks.
The Federal Bureau of Investigation (FBI) recently issued an alert warning which urged individuals to be on the lookout for the following red flags:
- Unexplained urgency
- Last-minute changes in wire instructions or recipient account information
- Last-minute changes in established communication platforms or email account addresses
- Communications only in email and refusal to communicate via telephone or online voice or video platforms
- Requests for advanced payment of services when not previously required
- Requests from employees to change direct deposit information
Here are some basic rules and best practices to protect you and your employees from falling victim to these scams:
Exercise caution – Don’t open emails from unfamiliar email addresses or contacts. Or if you receive an email that appears to be from a trusted source, but appears ‘odd’ call and verify with the sender the authenticity of the email.
Avoid clicking on links and opening attachments – Verify a link by hovering your mouse button over the link to see where it leads. Sometimes, it’s obvious the web address is not legitimate. But keep in mind phishers can create links that closely resemble legitimate addresses. Delete the email and notify your IT department.
Get information about government actions regarding COVID-19 from reputable sources – For the most current information, visit the CDC and WHO websites.
Do not reveal personal or financial information – Emails seeking personal information like your Social Security number or login information is a phishing scam. Never respond to solicitations for this information. If you receive an email saying your shipment has been assigned a new ‘tracking id’ and you are asked to click the link to verify the update. Do not click the link. Instead, go to the website of the delivery service and enter the tracking id to verify if a change was made.
Do not use open or unsecure Wi-Fi for working remotely – Never use public wi-fi. When working remotely it is best practice to have a mobile wi-fi device that you can securely connect to.
Connect with your IT department – If you receive a suspicious email, forward the entire email as an attachment to your IT team. If you click on a link or open an attachment in a suspected phishing email, report any incident immediately.
If you are concerned about your company’s security controls or your phishing risk, connect with our team. We can assess your systems and provide value-added recommendations to protect your organization.
Tiffany Pollard, CISA
Risk Services Practice Leader, William Vaughan Company
Tiffany.pollard@wvco.com | 419.891.1040
Categories: COVID-19, Risk Services
IRS Modifies 1099 Forms & (Re) Introduces 1099-NEC
Sep 01, 2020
The IRS is making some significant changes to the 1099 process. Beginning with the 2020 tax year, a new 1099-NEC form will be used for reporting non employee compensation (NEC) payments. Previously NEC was reported in Box 7 of the 1099-MISC form. These payments will now be reported in Box 1 of the new 1099-NEC form. The 1099-NEC made an appearance in the 1980’s and is now making a comeback to alleviate deadline confusion caused by separate deadlines for Form 1099-MISC that report NEC in box 7 and all other Form 1099-MISC for paper filers and electronic filers. Companies will start reporting on the new Form 1099-NEC in January 2021.
There are several parts of the new 1099-NEC form worth noting:
- Box 1 is where you key in the dollar amount of non employee compensation.
- Box 4 is used for any amount you held back to comply with backup withholding requirements.
- Boxes 5-7 are used to report any state withholding.
In addition, the removal of NEC payments on the 1099-MISC form has resulted in a reordering of information and corresponding boxes. These changes are listed below:
- Box 7 is where you will now key in payer-made direct sales of $5000 or more
- Box 9 is where you will report crop insurance proceeds
- Box 10 is used for gross proceeds to an attorney
- Box 12 is for Section 409A deferrals
- Box 14 is for reporting non qualified deferred compensation income
- Boxes 15, 16, and 17 is where you will report state taxes withheld, the state identification number, and the amount of income earned in the state.
The deadline for both paper and electronic filing of the 1099-NEC form for 2020 is February 1 for both the recipient and the IRS. The 1099-MISC is due to recipients by February 1 while they are due to the IRS by March 1 for paper filing and March 31st for electronic filing.
For up-to-date information on these changes, you can visit the IRS website or connect with us at 419.891.1040.
By: Aaron Gray, Accountant
Categories: Tax Compliance